Paytm payments bank says it will lay off about 20% of its staff before shutting down

Indian digital payments company Paytm plans to cut nearly 20% of its workforce at its banking unit, two sources said, as a looming central bank deadline to halt most operations casts uncertainty over the unit’s future.

Paytm Payments Bank has decided to lay off employees in certain departments, including operations, sources with direct knowledge of the matter said.

The sector had 2,775 employees as of December 2023, according to information provider Tracxn.

Paytm, formally known as One 97 Communications, owns 49% of the bank, which the Reserve Bank of India (RBI) ordered in late January to stop accepting credit transactions or deposits for products such as savings accounts, prepaid cards, etc. following continued compliance violations. The digital wallet will be closed before March 15th.

Paytm shares have fallen 54% since the regulatory restrictions, marking the worst crisis for one of India’s largest digital payments companies.

“As this regulatory order coincides with the review season, employees with lower ratings have been asked to leave,” said the first source, an employee in the banking sector.

“Employees are frustrated because management has reneged on its promise not to fire anyone,” this person said.

A second source, also a banking unit employee, said that at an internal town hall meeting in February, Paytm CEO Vijay Shekhar Sharma assured bank employees that there would be no layoffs.

Both sources spoke on condition of anonymity because they were not authorized to speak to the media.

A spokesman for Paytm Payments Bank declined to comment.

“There are no layoffs here,” a Paytm spokesperson said. The spokesperson added that the company is undergoing an annual appraisal cycle and adjustments may be made based on performance evaluation and suitability for the role. “It’s important to understand that this process is not the same as layoffs”.

Customers with deposits to pay motorway tax in their bank accounts, wallets and toll tags will still be able to use them after Friday’s deadline. However, new deposits cannot be made.

Paytm Payments Bank will still hold a regulatory license unless the RBI revokes it.

A second source said it was unclear what role Paytm Payments Bank would play after operations cease.

Paytm has yet to provide an update on what the bank’s employees will do after the relocation, both sources said.

A second source said Paytm has absorbed around 100 employees from the banking unit.

Paytm, which has been leveraging its banking arm to support digital payments through its own app, is expected to get permission from the National Payments Corporation of India (NPCI) this week to allow its customers to continue using the Paytm app for payments on the country’s popular Unified Payments Interface (UPI) .

© Thomson Reuters 2024